Photo: Swiss Federal Customs Office
BASEL / GENEVA, SWITZERLAND – Lower prices across the border in France thanks to the high Swiss franc don’t always mean the Swiss lose out: the Swiss Customs Office says that in 2011 its revenues rose thanks to import declarations, from CHF28.7 million to CHF39.8m.
Imported border goods remain nevertheless a small part of customs revenues, only 0.2 percent of the CHF23.47 billion, which is more than one-third of all Swiss federal revenues.
The 30 percent increase in declared goods was accompanied by revenues from those who couldn’t resist the temptation to buy more without declaring the goods, as the number of contraband merchandise cases rose by 36 percent.
Customs offices and border guards say that while contraband goods are brought in by amateurs and professionals, they focused on the second group last year and uncovered 5,800 cases, some 400 more than in 2010.
They delivered 2,960 people to the police and discovered 1,477 falsified or illegally used documents and 1,308 illegal arms.
They seized, among other drugs, 208 litres of KO drops, more than triple the quantity found in 2010 and equal to 100,000 doses. It has no smell or taste and is “regularly used in kidnappings and sexual crimes”, notes the federal office.
Seized in Bardonnex, 2011
The most popularly imported illegal drop was Viagra-type erection drugs and the most popular source country was India.
Foods remain high on the list of illegal imports: fruits and vegetables (818 tons), cereal for human consumption (41 T), spirits (32 T), Wine (24 T), Meat and meat products (28.5 T), Olive and other consumable oils (20 T), Milk and cheese products (3 T).
GENEVA, SWITZERLAND – Japan has announced its first trade deficit since 1980, Y2.49tn ($32bn), with Prime Minister Yoshihiko Noda saying it will take until 2014 for a turn-around. Analysts, according to the financial press, are gloomier about Japan’s short- to mid-term prospects for avoiding a current account surplus. The savings rate in the country has been falling, fuel costs have risen sharply in the past year and the trade balance has been hurt as well by a combination of the broader impact of the major earthquake at the start of 2011, floods in Thailand which have pushed down exports, and a trade deficit with China that is five times higher than in 2010.
Japan has historically had large trade surpluses.
Links to other sites: Bloomberg, Financial Times, RTE
Mitt Romney (photo, Gage Skidmore / Wikipedia)
GENEVA, SWITZERLAND – US Presidential candidate Mitt Romney, whose estimated net worth is $190-250 million, has made public more than 500 pages of tax records after losing the South Carolina primary over the weekend to Newt Gingrich, who accused the former financial investment manager of not coming clean about his wealth. It is the first-ever disclosure by Romney, even though he earlier served as governor of Massachusetts.
Media reaction today in the US to details of the Romney fortune and the couple’s tax record mentions financial accounts in the Cayman Islands and in Switzerland, but focuses on the fact that he is one of the wealthiest candidates ever for the top US office. The Caucas, a New York Times blog, notes that “The Wall Street Journal and financial wire services showed a vast array of investments from a recently closed Swiss Bank account to holdings in Bermuda to the Cayman Islands, all underscoring the breadth and depth of his wealth.”
The disclosure and debate over it are part of growing evidence that a hot presidential campaign topic will be fiscal reform and the disparity between what the rich and other people pay in taxes.
State of the Union address Tuesday night may focus on economic inequality
President Barack Obama will give his State of the Union speech tonight and, according to CBS News, “Economic inequality is emerging as a central theme in the battle for the White House, with Obama trying to harness populist anger at Wall Street and corporations against a backdrop of chronically high unemployment. He plans to call for higher taxes on millionaires in his State of the Union address to Congress on Tuesday night, embracing an idea advanced by billionaire investor Warren Buffett and Occupy Wall Street protesters.”
Media references to the Swiss bank account are generally limited to implying that it is an indication of his wealth and noting that it was closed at the suggestion of political advisors. CBS News reports that “in a conference call with reporters, Brad Malt, Romney’s trustee, called the Swiss account ‘fully legal, fully disclosed’ but said it was closed in early 2010. He added: ‘The income earned on that account is taxed just as any other domestic or other bank account owned by the blind trust.’”
The news channel goes on to note that “pages and pages are devoted to foreign entities in which Romney is invested. Many are located in places like Luxembourg, Ireland and the Cayman Islands, all famous tax havens. None shows much income.”
Reuters, in an article widely picked up, writes 24 January, that “the emerging picture was of a man of great means who contributes mightily to charity. The documents showed he and his wife contributed $7 million in charity over the two years, much of it going to his Mormon church. That represents more than 15 percent of the Romneys’ income for those years”, more than the tax rate paid by the Romneys, with an
Proposal would allow bank account numbers, balances, capital transactions to be shared in anti-terrorism, money laundering cases
Seeking the full story on money laundering: new Swiss banking secrecy rules may lie ahead
BERN, SWITZERLAND – Swiss banking secrecy could be in for its first serious change, in addition to the pending double taxation treaty with the US.
Wednesday 18 January the Federal Council put out for consultation an amendment to the Money Laundering Law that would allow Swiss authorities to share, with certain foreign government agencies, bank account numbers, information on capital transactions and bank account balances. The information could be supplied if requested as part of money laundering and anti-terrorism investigations.
Today’s proposed legislative changes will now be sent out for consultation until the end of April, at which point the pre-project proposal will be adapted in line with remarks submitted, before it goes through further legislative hoops.
The Swiss-US treaty, which has not yet been approved by parliament, would allow the US to ask for bank data without first providing a name and account number, in a very limited number of cases. It has been reported by US media as a breach in the wall of Swiss banking secrecy, but in Switzerland it is negatively viewed by some politicians as simply a concession to one large nation.
The new proposal would have a far broader impact, affecting working relations with financial investigators in 126 other countries. Support for money laundering laws has, in contrast, been stronger in Switzerland, with the government pushing in recent years to uncover illegal assets of political leaders from elsewhere. As a result, “Switzerland has returned about CHF 1.7 billion to their countries of origin, which is more than any other financial center of a comparable size”, Bern notes, but exchanges with other governments have been hampered by Swiss banking secrecy laws.
Swiss agency will also be allowed to request more information
The changes would also work in the other direction, giving MROS (Money Laundering Reporting Office Switzerland), the agency through which such requests are made, the power to obtain more information from its counterparts abroad than it can today, given the constraints of Swiss banking secrecy laws.
In future MROS would also be able to demand financial details from third parties that have not themselves announced suspect financial activity, not possible today because of banking secrecy constraints. The government argues, in a statement on the proposed changes, that such occasional requests would improve the quality of the information Switzerland can supply other governments as well as information on suspect cases generated here.
The news was announced in the context of efforts by the federal government to reinforce efforts to fight money laundering and to strengthen the Swiss financial industry. Swiss bankers have been under pressure from other governments, in particular to provide information to tax authorities.
Credit Suissse and 10 other banks are currently under investigation by the US Department of Justice on suspicion of helping wealthy Americans avoid taxes.
The proposal is the result of MROS being the only agency among the Egmont group of Financial Intelligence Units (FIUs) from 127 countries that does not share financial information. The Egmont group in July 2011 decided that MROS’s refusal to share information, on the grounds it contravened Swiss law, runs against the group;s principles, and it threatened to suspend Switzerland unless it showed, within a year, that it is undertaking the steps necessary to change the law.
Bank Council says “taking measures is in order”: tighter rules immediately for board members and greater future transparency
Swiss National Bank vice-chairman Thomas Jordan, chairman Philipp Hildebrand and member of the Enlarged Board, Jean-Pierre Danthine
ZURICH, SWITZERLAND – The supervisory body for the Swiss National Bank (SNB) announced after a special meeting Saturday 7 January that it is tightening measures governing board members’ personal financial transactions, effective immediately, hiring an outside body to carry out a review with an eye to longer term measures. The Bank Council has also “decided that all bank transactions effected by members of the Enlarged Governing Board between 1 January 2009 and 31 December 2011 will be reviewed by external auditors (preferably KPMG or Ernst & Young).”
The extraordinary measures follow several days of headlines where SNB Chairman Philipp Hildebrand’s family’s foreign exchange transactions in late 2011 came under close scrutiny from Swiss but also foreign media and political parties, culminating in a press conference Thursday with Hildebrand recapping events and taking questions from dozens of journalists.
At issue: Hildebrand’s wife, an experienced foreign exchange trader who now runs a Zurich art gallery, bought and sold dollars and made a sizeable profit in October 2011, close to the time when her husband was capping the Swiss franc/euro rate, and questions were raised about whether Hildebrand personally benefited from inside information. The Bank Council’s internal review as well as an independent one done by PricewaterhouseCoopers (PwC) showed no wrongdoing.
Swiss media gave his performance and explanations at the press conference mixed reviews, with French language media more generous than some in German-speaking areas. The right-wing UDC People’s Party continues to call for his resignation, but their own role in the scandal remains unclear. Hildebrand’s personal banking data was illegally shared by a Sarasin Bank IT employee with a lawyer who turned it over to Christoph Blocher, former member of the government and UDC party leader. Blocher has remained silent on the affair.
The full text of the press release Saturday from the Bank Council:
“At its meeting of 7 January 2012, the Bank Council of the Swiss National Bank (SNB) addressed issues concerning corporate governance and own-account transactions involving financial instruments. It became evident that, given the events of the past few days and developments in financial markets, as well as with a view to improving transparency, taking measures is in order.
“The Bank Council has therefore adopted the following resolutions:
With the support of external specialists, a comprehensive revision of the regulations and directives on own-account transactions involving financial instruments by members of the Enlarged Governing Board will be undertaken. The corresponding draft regulations and the revised directives for SNB employees are to be submitted to the Bank Council as soon as possible.“Furthermore, the Bank Council has decided that all bank transactions effected by members of the Enlarged Governing Board between 1 January 2009 and 31 December 2011 will be reviewed by external auditors (preferably KPMG or Ernst & Young).
“Until such time as the regulations and directives have been revised, members of the Enlarged Governing Board as well as staff members with access to privileged information must first get approval from the SNB’s Chief Compliance Officer for foreign exchange transactions which exceed CHF 20,000. The Audit Committee of the Bank Council will be informed periodically of such instances.”
ZURICH, SWITZERLAND – The Zurich Cantonal Bank (ZKB) is closing all accounts for US domiciled clients, citing growing pressure from the US, according to Tages-Anzeiger 5 January: “The pressure from the United States on foreign banks makes the risks too high.”
Urs Ackermann, ZKB spokesman told the Swiss news agency, ATS, that the measure also affects Swiss expats living in the US.
The bank alerted the clients concerned 23 December, giving them 60 days to transfer their funds to other banks.
The ZKB and other Swiss banks have been accused by US tax authorities of helping American clients hide their taxable assets. The bank had already closed down securities portfolios of US-based clients in 2009.
Related stories:
Swiss bank Wegelin braced for “expected” fight with US, GenevaLunch 5 January
Philipp Hildebrand, Swiss central bank boss, meets journalists, GenevaLunch, 5 January (dollar currency deal affair)
ZURICH, SWITZERLAND – The Swiss National Bank Wednesday took the unusual step of publishing its internal regulations governing the private financial activities of its senior management, as part of efforts to clear chairman Philipp Hildebrand’s name in the face of accusations he profited from his position.
By comparison, other central banks tend to make public their regulations concerning investment and disclosure for senior management.
The SNB also published the independent report from an investigation it had asked PricewaterhouseCoopers to make into Hildebrand’s transactions, which the banker’s wife, a former currency trader, said were her own.
Documents were taken from Bank Sarasin and given to a lawyer who is close to the right-wing UDC People’s Party that purportedly showed Hildebrand and his wife making a CHF60,000-plus profit on currency transactions.
Hildebrand is scheduled to meet the press Thursday in Zurich, to clarify the situation.
SNB internal regulations (German and French) and the PwC report (Ger)
Bloomberg/Business Week article, including EU and US Federal Reserve regulations on management private investment rules
Philipp Hildebrand, chairman, Swiss National Bank
ZURICH, SWITZERLAND – A computer system employee of Bank Sarasin turned himself into police 1 January, it was revealed late Tuesday, after sharing documents linked to currency transactions made by the family of Philipp Hildebrand, chairman of the Swiss National Bank.
Swiss data protection and privacy laws make it illegal to share such information.
The documents were given to an attorney who is close to the UDC, Switzerland’s right-wing People’s Party. The employee, who was promptly fired by the bank says the lawyer made an appointment to meet Christoph Blocher 11 November. Blocher is a former leader of the UDC who was a member of the Swiss government until 2007.
Swiss media have been speculating about the role of Blocher in the leak to media that Hildebrand’s wife, a former currency trader who owns a gallery in Zurich, had made more than CHF60,000 in profit buying and selling one million dollars around the time that her husband was capping the Swiss franc. She spoke about the transaction for the first time on television Tuesday, saying that as a former currency trader she saw the “ridiculously” low level of the euro as an opportunity and that the day after she purchased dollars she informed the Swiss National Bank of the transaction, made in her own name, to ensure transparency.
TSR reports that not only did the Bank Council, the governing body that oversees Swiss National Bank activity, investigate and clear Hildebrand of suspicion of illegally benefiting personally from his position, but it asked PriceWaterhouseCoopers to carry out an independent investigation, which also cleared Hildebrand.
Christoph Blocher told Swiss German television Tuesday evening that he intends to remain silent for now.
Background story, GenevaLunch 3 January
Bank Sarasin’s public statement in full
ZURICH, SWITZERLAND – Swiss National Bank President Philipp Hildebrand is getting heat from Swiss media over the profitable sale of dollars by his wife Kashya Hildebrand in October. It’s unclear who the source is for the figures, but both NZZ and Blick have reported that she made more than CHF60,000 in profit after buying and later selling $1 million.
Christophe Darbellay, president of the federal government’s Commission for Economy and Taxation, said that an internal bank council investigation has left “too many question marks”. At issue is the question of whether or not it is legal for SNB employees and their family members to make trades; the bank’s regulations are not a matter of public record.
The SNB president announced 6 September that the central bank was capping the over-valued franc, and it promptly fell against the dollar. Swiss media have been asking if the bank president’s wife was privy to inside information, which the bank’s governing council denies.
The bank has confirmed, according to Reuters, that “Kashya Hildebrand, a former currency trader who now runs an art gallery in Zurich, bought an unspecified amount of US dollars for herself and her daughter” but declared that an internal investigation turned up no wrongdoing.
Hildebrand has a good reputation in Switzerland although right-wing former UDC party leader Christoph Blocher recently criticized him strongly, and there has been media speculation that Blocher may in some way be linked to the information about Ms Hildebrand. although there appears to be no proof of this. Blocher has refused to comment on the matter.
GENEVA, SWITZERLAND – Italy’s new prime minister, Mario Monti, has told the country’s parliament, through his minister for relations with that body, that Italy should not seek a double taxation agreement with Switzerland along the lines of those with Germany and the UK.
But the opposition then accused him of not being open to negotiations with Switzerland, which has expressed its willingness to seek an agreement, and of not going after the CHF14-15 billion such an agreement could bring into the Italian government coffers.
The European Commission has said it is opposed to such agreements, which allow Switzerland to respect its banking secrecy laws and partner governments to collect tax revenues for their citizens holding Swiss bank accounts. The UK and German agreements call for Swiss financial institutions to collect withholding taxes on transactions, money that is paid to the foreign treasuries. Account holders then have the choice of coming forward and announcing their holdings in order to recuperate the tax, or remaining silent and forfeiting the tax.
Photo: Shangrila Farms, Yunnan Province, China
BERN, SWITZERLAND – “Switzerland’s free trade agreement negotiations with China are in a rather early stage but they are well underway” following the third round of talks between the two countries, Swiss Ambassador and Delegate for Trade Agreements Christian Etter has told GenevaLunch.
Switzerland, which has a trade surplus with China despite the former’s small size, has taken a European lead in working out a free trade agreement (FTA) with Asia’s giant economy since the two signed a Memorandum of Understanding 28 January 2011, says Swiss President Micheline Calmy-Rey.
“It shows we’re not afraid,” she said, smiling, at a press conference in Geneva 28 November. She was treating it lightly, but Switzerland is keen to keep the negotiations moving, particularly in the wake of a slowdown in negotiations between China and Iceland and China and Norway.
Both sides have said they would like the talks to move swiftly.
EU’s Almunia says stable trade framework is the way forward
The comments come as the European Union’s anti-trust boss called for less bickering and a better trade framework between the EU and China, at the EU-China Forum held in Brussels this week, organized by the Friends of Europe. Joaquın Almunia is quoted by Dow-Jones 29 November as saying that “everything linked with intellectual property rights, innovation, know-how, is not well-solved in our relations, we are discussing with our Chinese partners but I don’t find we have a stable framework to benefit from both sides of our common understanding.” He added that “playing this same kind of game means these pressures, these intensities will increase.”
Swiss-China trade picks up while Swiss-EU trade slows
Switzerland is China’s ninth largest trading partner in Europe, with the smaller country having a trade surplus for 2011 of CHF2.13 billion by the end of October. China is Switzerland’s largest trading partner in Asia. During the first 10 months of the year Switzerland’s exports to China grew by 26.2 percent, while imports from China slipped by 3.3 percent.
China is Europe’s largest trading partner and its trade surplus with Europe is €160-€180 billion in 2011, according to the Wall St Journal.
Trade has been stagnant between the EU and Switzerland during the first 10 months of the year, with exports to the EU down 0.5 percent and imports up 3.1 percent.
Iceland was the first European country to start FTA negotiations with China but its talks have cooled down, with Iceland’s application to join the European Union. Negotiations began formally in July 2010; EU membership would exclude implementing a separate FTA with China.
And talks with Norway have slowed down since China expressed its displeasure over the 2010 Nobel Peace Prize being awarded to Chinese dissident Liu Xiaobo.
Third round of negotiations covered hefty list of topics
The latest round of talks in the free trade negotiations between Switzerland and China took place in Montreux 8-10 November. The talks were launched in Davos in January, with talks held once in Bern and once in Beijing.
The two teams in Montreux held expert level discussions and exchanged information on respective regulatory systems and FTA-practices covering several areas: trade in goods, trade in services, rules of origin, customs procedures and trade facilitation, technical barriers to trade (TBT) and sanitary and phytosanitary measures (SPS), trade remedies, intellectual property rights, competition and dispute settlement.
The heads of of the two delegations and experts discussed investment promotion, cooperation on trade and sustainable development, and cooperation on government procurement, and agreed on follow-up work in all areas.
The fourth round of negotiations are expected to take place in China in early 2012.
Background
- World Trade Organization, most recent trade policy review for China, June 2010
- EU / China Partnership and Cooperation Agreement
The 1 December window on the 2010 Sustainable Development calendar gave us a peek at the world behind our chocolate products - two more days until you can open the new 2011 calendar windows!
BERN, SWITZERLAND – One of Switzerland’s quirky offerings is back, the seasonal Swiss online sustainable development Advent calendar where you can have a lesson a day and take part in daily quizzes to try to win prizes, in the interest of boosting sustainability.
A bonus is the list of gift ideas to spark your imagination for suitable gifts. The project, started in 2000, is now available in five languages, to encourage broader participation worldwide.
The calendar is put together by a surprisingly rich mix of researchers, companies, educational groups, federal authorities, environmental organizations and others who are joining forces for the second year to create the online calendar (see list of partners).
For those who did not grow up with Advent calendars, the idea is that for the four weeks of Advent that run up to Christmas, you open a window a day, usually to find an interesting little gift, either visual or physical.
The windows work with themes such as green technology, especially ICT and protecting nature. The sources of information for the windows come from firms, non-governmental organizations and the Swiss government, one-third each. The windows are designed to show “affordable, pleasant or simply surprising solutions” according to the federal energy office which, with the Swiss sustainable development network, Öbu, is a major sponsor.
Examples of corporate solutions include: travel company Kuoni shows the first sustainable development certifiied agency trips; Coop supermarket chain shows how certified palm oil can be part of our consumer products; Ricola, the herbal sweets maker shows us attractive homes for bees so we can reduce their mortality rate, while canton Geneva and the town of Yverdon-les-bains show us why it makes sense to recycle the cartons used for many of our drinks.
Swiss president says concern over legality of UK, German deals is EC’s “internal” problem
Swiss President Micheline Calmy-Rey in Geneva 28 November
GENEVA, SWITZERLAND – Switzerland is looking for an agreement with the US that will draw a line on the past, where banks and US tax fraud or evasion is concerned, Swiss President Micheline Calmy-Rey said Monday 28 November. It should include an agreed method for the US to collect tax money in the future while Swiss banking secrecy laws are respected.
“We don’t want to be a place for people who are trying to evade taxes. But we want to sort out past issues, once and for all, and put some order into [things],” she said, referring to ongoing problems between Swiss banks and the US tax arm, the IRS.
“And in the same agreement, we want to deal with the future,” for example through the kind of withholding tax agreement Switzerland struck in August with German and the UK.
“That, in essence, is our position, and it’s the same as it was with the UK and Germany.”
Her remarks were made at a press conference in Geneva Monday afternoon, 28 November where the president was presenting an overview of International Geneva, and its growth in size and importance in the past decade. She earlier attended the opening of the International Conference of the Red Cross and Red Crescent in Geneva.
EU tax commissioner suggests to UK paper the EU might sue Britain
Switzerland, under the UK and German agreements, which have yet to be ratified, is to collect withholding taxes on transactions by financial institutions, then turn over the money to the other countries without divulging the name of the account owners.
But European Union Tax Commissioner Algirdas Semeta told the Financial Times in an interview published Monday morning that he believes Britain and Germany went too far in signing their own bilateral tax agreements with Switzerland. The FT writes that:
“Brussels is threatening to sue Britain unless ministers significantly alter a landmark tax deal with Switzerland, in a dispute that will cast doubt over the £4bn to £7bn of expected proceeds for the Treasury. European Commission lawyers concluded that the bilateral deal, which recovers billions of unpaid taxes in return for protecting the prized secrecy of the Swiss banking system, is in breach of European Union laws that are tougher on tax evasion.”
Micheline Calmy-Rey, Swiss president
Calmy-Rey says this is an internal matter for the European Union, and it’s not for Switzerland to comment on who is competent in this area, the EU or its member states.
Switzerland and the European Union have a tax agreement covering “taxation of savings income in the form of interest payments”, signed in 2004 and revised in 2008 and again in January of this year.
The FT reports indicates that the EU’s pressure on Britain and Germany to renegotiate their deals with Switzerland is causing some friction.
Whether or not Switzerland would be open to new negotiations remains unclear, although the Swiss Bankers Association CEO Claude-Alain Margelisch said last week that “our view is that there can be no renegotiation” and the organization’s priority is to see that all parties are convinced that the agreements are true and fair compromises.
US talks could create new agreement, but form is still unclear
The US-Swiss talks are widely expected to be completed within weeks if not days, but the ultimate form an agreement might take is not yet clear, Mario Tuor, spokesperson for the Swiss Federal Tax Office told GenevaLunch Monday evening. The two countries have a treaty dating back to 1996 that covers tax fraud, still in place, and a new treaty covering tax evasion, which goes before the Swiss parliament in December 2011.
Tuor repeated Calmy-Rey’s assertion that Switzerland also wants an agreement which covers the banks not currently being investigated by the US Justice Department for helping Americans evade US taxes. “The form [it would take] is not yet clear. But it is clear now that we will not need a parliamentary agreement,” which a treaty would require. “We won’t need an agreement that calls for a treaty because it will be based on existing law.”
Switzerland and the US signed a treaty in 2009 that covered an American request for assistance with UBS 4,450 bank accounts, whose owners had not been identified, thus putting the demand outside the existing legal framework.
The talks are raising questions among many Americans who live overseas and who are grappling with the implications for them of tax reporting changes that were designed to prevent fraud by wealthy Americans who live in the US and have offshore accounts.
In the sights of the IRS, but part of a much bigger picture
BERN, SWITZERLAND – Americans who create offshore shadow companies or foundations, clearly to avoid taxes and with the active help of a Swiss bank, could see their financial information shared with the IRS even if the US tax authority cannot provide their names, if parliament accepts recommendations of the upper house foreign affairs commission.
The commission agreed Thursday 10 November, in a 7 to 3 vote, to an amendment to the new double taxation treaty with the US, which parliament will consider in December. The amendment would allow group requests to be made: bank data could be given to US authorities without the US first providing a name and account number, in a very limited number of cases.
US, Swiss seek global bank solution, sooner rather than later
Meanwhile, the investigation into 11 Swiss banks by the US Justice Department continues. The US and Switzerland have been in talks for some time to find what Mario Tuor, spokesperson for the Swiss Tax Office calls “a global solution for all banks.”
There is no timeframe for finding such a solution, an official who asked not to be named has told GenevaLunch, but both sides say they want a solution sooner rather than later.
Switzerland has “made no offer to the US” over 11 banks
Tuor told GenevaLunch that Switzerland has made no offer for a lump sum payment, contrary to a Reuters “exclusive” story 3 November that mentioned a multibillion dollar settlement. Another Reuters reporter later quoted Tuor as saying Switzerland has not made an offer as part of the talks. He clarified to GenevaLunch Friday that no offer has been made by the Swiss, period.
In fact, says one official,who concurs, saying Switzerland has not made an offer, some people close to the case have discussed figures but these are far smaller than the several billion that Bloomberg and later, Reuters, mention.
The Reuters reporter in New York has qualified the Credit Suisse investigation by the IRS as part of a showdown between the two governments—a statement at odds with the Swiss government’s insistence on including in the new treatment the clarification that group requests can be made under some circumstances. “The move by the two Swiss banks to disclose American client names and account information is the latest event in a showdown between Switzerland and the United States over the withering tradition of Swiss bank secrecy,” according to reporter Lynnley Browning, who covers accounting and tax stories from the US for Reuters.
Browning repeated today, as news, information she says she gleaned a week ago from unnamed US “sources briefed on the matter”—despite it later being flatly denied by the Swiss government to another Reuters reporter in Zurich. Lynnley Browning, who has written articles for the New York Times in the past, frequently pitting the US against Switzerland as adversaries, writes 9 November that:
“Switzerland is trying to craft a deal with the United States that would cover its entire banking industry of some 355 banks. Switzerland had wanted a deal that covered accounts dating back to early 2009, when UBS AG , Switzerland’s largest bank, averted indictment and reached a $780 million deferred-prosecution arrangement with US officials. But the two letters from Credit Suisse and Clariden Leu suggest that US authorities are unwilling to accept a deal that would start with 2009 rather than the January 2002 date cited in the letters.”
Credit Suisse letters sent to clients at gov’t behest
Credit Suisse and its subsidiary bank Clariden Leu, this week sent out letters to some clients warning that their names will be turned over to the IRS, with Swiss government support, as a result of the investigations. Bloomberg reports that
“The IRS sought data for accounts owned through domiciliary companies in which clients are the beneficial owners, according to the letter. The Swiss Federal Tax Administration issued an ‘immediately executable’ order to the Zurich-based bank, which has no right to appeal, according to the letter. Taxpayers can consent to the SFTA handing over their account data to the IRS, or they can use the Swiss legal system to appeal a ruling by the SFTA that their account must be given to the IRS, according to the letter.
“‘Please be advised that Credit Suisse is not able to provide any information on whether or not information with respect to a specific account will be provided to the IRS,’ according to the letter, signed by managing directors Michel Ruffieux and Stephan Gussmann.”
The banks’ moves are being reported by some media outside Switzerland as a breakdown in Swiss bank secrecy but the information in the letters doesn’t reflect a change in practice which is based on the old 1996 tax treaty that allowed some group requests; the US reportedly has gleaned enough information from other cases to find patterns of fraud at 11 Swiss banks.
Catching major tax evaders in the future
Some US media are also incorrectly reporting that the amendment to the new treaty provides for an “automated” process. The treaty would simply clarify that some group requests could be accepted by Switzerland, a feature of the old 1996 treaty. The US is the only country to have such an agreement with Switzerland, according to Swiss officials.
“Tax fraud and the like” includes some cases of tax evasion
A significant change in the new treaty is that it will allow the US to request assistance in some cases of tax evasion and not just fraud.
The Federal Justice Department published a statement 31 March 2010 about the “amending protocol” of the new treaty that parliament will consider in December, noting that it “permits Switzerland to provide treaty assistance in cases not only of tax fraud, but also of continued and serious tax evasion.”
The commission included, in August, the preamble (see text) requested by the Federal Council that explicitly authorizes for the first time judicial assistance in a limited number of cases where American requests do not include a name and address. But there is a clear rider: the requests must be “proportionate” and “practicable”.
In other words, Bern continues to insist, fishing expeditions or mass requests for information are specifically ruled out. Switzerland remains firmly opposed to this, citing Swiss banking laws that protect privacy.
The amendment notes that the US must provide evidence of a “pattern of flagrant” behaviour and of a very serious effort either to defraud or to evade taxes involving “large sums of money”.
Amended treaty doesn’t provide catalog of suspicious behaviours
A minority of the foreign affairs commission called for a catalog of catalog to be drawn up that specifies what behaviour constitutes a pattern and is therefore considered suspicious and what is not, but the commission in the end voted against this. Le Temps in an article Friday morning points out that this could create legal problems in the future.
The amendment would apply only to the agreement with the US and not to other double taxation agreements, the commission’s chairman said Thursday evening.
The next step is for parliament to consider the commission’s recommendation, which calls for the treaty to be approved, with the amendment included.
The commission also recommended that parliament approve nine other double-taxation agreements as they stand, including those with France and the UK
Swiss federal government timeline of the UBS case and the double taxation treaty with the US
Swiss franc weakens slightly but not enough for the SNB
ZURICH, SWITZERLAND – The Swiss franc weakened in trading Monday, to $.90 after earlier trading at $.88. It was also weaker against the euro, at 1.24, but with the day’s low at 1.22.
Philipp Hildebrand, Swiss National Bank chairman, told Swiss German papers over the weekend that the bank will continue to push the franc down, seeing it as still very over-valued.
Monday’s news that the consumer price index had dipped slightly, but for the first time in two years, will put further pressure on the central bank to get the franc down to avoid recession.
Chinese tourists overtake Italians, catching up with French, British
Chinese tourists on Mt Saentis 29 October, next to Switzerland's first mountain peak weather station, commissioned in 1882: on a clear day six countries are visible from this point
BERN, SWITZERLAND – The Swiss franc continues to have a strong impact on European and US visitors to Switzerland, with the number of overnight stays by foreigners in September down 6.8 percent compared to the same month a year earlier.
Foreigners accounted for a little more than half of the industry’s 3.3 million overnight stays in September.
The overall figure for the year to date is down 2 percent, but in September overnight stays fell 3.4 percent.
The decline in European stays continued, with Bern attributing this largely to the over-valued Swiss franc against sterling and the euro. Visits by foreigners were down 6 percent, but European visitors’ stays fell by 11 percent.
German tourist numbers were down 13 percent, British 13 percent, Dutch 12 and Italian 11 percent. US visitors are down 9.4 percent, although the number of overnight stays by Canadians rose
Chinese tourists to Switzerland: rapid increase as Alps tug Asians
Mt Saentis 30 October: a popular destination for German tourists, is attracting Chiense visitors
Asian numbers and in particular overnight stays by Chinese tourists continue to rise, with a 12 percent overall increase that includes a 43 percent increase by Chinese visitors, some 20,000 overnight stays. For the year to date, Chinese tourists show a 58.6 percent increase.
Germany remains by far Switzerland’s largest tourist client country, with some 470,000 overnights to date in September. The US was second with 172,000, Britain third with 152,000, France fourth with 100,000 – and then the surprise of China, with 67,000 overtaking Italy, with 65,000.
Wanted: British skiers, snowboarders, holiday fans and winter hikers
The British figures are likely to cause particular concern, with the crucial ski season coming up. Swiss statistics show 1.43 million overnights from January to the end of September, and the fourth quarter tends to be low, but the industry is holding its breath looking at winter ski season reservations.
British statistics register “visits” by its citizens abroad rather than overnight stays, and in 2010 the number of visits was down to 896,000 from a 2008 figure of 1.16 million. The first quarter of the year, with the ski season, saw 294,000 British visitors in 2011, compared to 350,000 a year earlier.
British tourists travelled again in the second quarter of 2011, but with the weakening pound, travel increased to North America, remained stable in the European Union and dropped to countries outside the EU, which includes Switzerland. Travel outside the EU during April to the end of June was at a level last seen in 2009 and before that, iln 2005.
LAUSANNE, SWITZERLAND – Peugeot-Citroën Thursday became the 11th major firm to join the Innovation Square on the EPFL campus, the first company from the car industry to bring in a large research and development budget, according to the universiy. The square opened in August 2010.
The group said in a press release 3 November that “The mission of this innovative structure is to foster a long-term vision for PSA Peugeot Citroën’s products and services.” The new unit is called StellaLab@EPFL.
The polytechnic made world headlines 28 September when it announced that new research with Nissan is studying the brain-computer interface and looking at the option of a computer-piloted car. Then 28 October it announced that, working with a French company, it had solved a major problem for compressed air cars by reducing charging time.
“EPFL conducts a great deal of research that is of interest to the auto industry, in a wide range of different fields,” it says in a 3 November press release. “For example, the Materials Sciences and Engineering Institute works to create light, sturdy composites; several robotics-oriented laboratories are designing and producing all sorts of mechanisms to help with driving and move toward ever-increasing comfort and safety for users and their environment; and there are a large number of projects that aim to replace fossil fuels in the transportation systems of the future, both by storing energy in various forms (new electric batteries, hydrogen, and even compressed air) and by using it with greater efficiency.”
ZURICH / BERN, SWITZERLAND – The Swiss National Bank is showing a consolidated profit of CHF5.8 billion for the first nine months of the year, thanks primarily to gold prices. The profit was achieved despite an over-valued Swiss franc that caused losses of CHF4.7 billion.
Other currency positions resulted in gains of CHF5 billion, giving the central bank a net currency position of CHF0.3b. The over-valued Swiss franc and intervention by the SNB, particularly in August and September, were the main factors in the bank’s currency situation at the end of nine months. The bank notes that at the end of the quarter, the US dollar was trading 3.1 percent lower than at the beginning of the year, and the euro 2.8 percent lower.
The SNB’s currency investments are 55 percent in euros, 25 percent in dollars, 9 percent in the yen, 4 percent in sterling, 4 percent in Canadian dollars and 3 percent in other currencies.
The price of gold at the end of September accounted for the bulk of the profit: it was around CHF47,089 per kilo, giving the bank a valuation gain of CHF5.0 billion. But the bank noted in a statement issued Monday 31 October that “the SNB result depends largely on developments in the gold, foreign exchange and capital markets. Consequently, strong fluctuations are normal, and only provisional conclusions are possible as regards the annual result.”
UBS bailout fund loan down by CHF4b to outstanding CHF7.9b
The stability fund, created for the government’s bailout of bank UBS in 2008, contributed CHF573 million in interest payments, to the central bank’s profits. “The loan to the stabilisation fund was reduced from CHF 11.8 billion (USD 12.6 billion) to CHF 7.9 billion (USD 8.8 billion), and the total risk exposure decreased from almost CHF 14 billion to around CHF 8.7 billion.”
GENEVA, SWITZERLAND – Expat Expo, one of the major fairs for newcomers to Switzerland, is on today, 2 October, in Geneva from 11:00 to 17:00 in hall 7 at Palexpo. Free entry, with 160 exhibitors who offer a variety of services to foreigners in Switzerland.
Orange Switzerland up for grabs
SWITZERLAND – The leading private equity group CVC is, according to exclusive information revealed by Reuters, planning to offer 1.5 billion euros for Orange Switzerland despite resistance from France Telecom to let it into the bidding auction.
France Telecom is concerned about CVC’s presence in the auction as it would deter other potential bidders.
Egyptian billionaire Naguib Sawiris is, according to the Reuters article, also among parties weighing a possible offer.
The interest in Orange, Switzerland’s third-largest mobile company, lays on the potential for a merger with Sunrise telephone. Experts however, believe such merger could run into regulatory hurdles similar to those encountered by France Telecom in 2010.
Jamie Dimon, JP Morgan's chief portrait by Hocried on Flickr
LONDON – “The United States should consider pulling out of the Basel group of global regulators,” said Jamie Dimon, chief executive of JP Morgan Chase, an American multinational banking corporation of securities, investments and retail, in an interview with the Financial Times.
Although Dimon says he is supportive of “forcing banks to have more capital” he argues that moves to impose an additional charge on the largest global banks go too far, particularly for US lenders and called it “anti-American”.
“I’m very close to thinking the US shouldn’t be in Basel anymore. I would not have agreed to rules that are blatantly anti-American,” he said in the interview.
In 2010 the Swiss-based Basel Committee on Banking Supervision also known as Basel III rules, set bank capital requirements, the ratio of highest-quality assets that banks hold against future losses. The Committee also established reserves of 7 percent in common equity and 10.5 percent in total capital.
Dimon said there was a threat that Asian banks in particular could overtake the US market because of the combination of US domestic and global rules.
According to the FT, Dimon also criticised global liquidity rules arguing that regulations that viewed covered bonds – a European market feature – as highly liquid but discounted government-backed mortgage-backed securities in the US, were unfair.
ZURICH, SWITZERLAND – Migros, Switzerland’s largest supermarket chain, is about to start trialling two new shopping systems, both designed to save time in checkout lines, says the store. The first will allow shoppers to scan a limited number of large items themselves. The second will allow them to check themselves out by scanning a limited number of items and paying for them.
Ikea has had a similar system for some time, but not for food items. Migros is starting its Subito system in Zurich, Lucerne and several areas in eastern Switzerland 6 September before rolling it out across the country.
Swiss Post says letters are back in style; postal service adapts pickup times
BERN, SWITZERLAND – Letters are fashionable again, despite the Internet, says Swiss Post, and it is adjusting its collection times to meet the changing needs of those who use the mail service.
Starting today, Monday 5 September, mailbox collections will be made in main towns and cities at 19:00 weekdays and 17:00 Sundays.
A searchable list of collection boxes is being published online and is available as a Post-app to make it easier to find the nearest one.
The new collection schedules and locations will cost Swiss Post CHF8 million.
Some 400 million letters are mailed annually in Switzerland and, while the number fell for several years, the fall levelled off in 2010. The first half of 2011 saw a slight increase.
The new system means that 93 percent of all mail will be collected at 17:00 or later, with 148 collections additional collections during the week, for a total of 469 at 19:00, and 222 more Sunday collections at 17:00, for a total of 479 emptied late in the day, out of the 1,800 with Sunday collections.
Geneva court where the case is being investigated - Photo by wrong_response in Flickr
GENEVA, SWITZERLAND – The Swiss public broadcaster Radio Suisse Romande (RSR) reports that three Al Rushaid Petroleum Investment Corp employees have been charged by the Geneva public prosecutor in a bribery and money-laundering case.
Two British nationals and one Pakistani working for the drilling division of Al Rushaid may have accepted millions of dollars in exchange for awarding valuable contracts; the funds may have then been illegally deposited in a Geneva bank.
Swissinfo reports that Al Rushaid claims it lost “hundreds of millions of dollars” because the equipment, “bought at inflated prices was often substandard or was not delivered at all, delaying or preventing the completion of contracts.”
The money, which has been blocked by Geneva judicial authorities was allegedly placed in a private Geneva bank.
Although Swiss radio declined to identify the bank, Bloomberg Businessweek says Geneva-based Pictet & Cie was sued in New York City by Rasheed Al Rushaid for “concealing their receipt of the bribe money.”
Lawyers for the accused maintain that the source of the money is not illegal. The bank, which according to Swissinfo has been questioned but not charged, also denies that the money was obtained illicitly.
Links to other sites: Swissinfo, RSR, Bloomberg Businessweek
LAUSANNE, SWITZERLAND – Skipass, a subsidiary of Kudelski, Lausanne-based world specialist in digital security, will be supplying secure access to half of the 2012 European Football championship matches, including those in Ukraine and at Poland’s largest stadium, the national stadium.
The Salzburg-based company said Monday it signed a contract in July to supply ticketing and secure entry facilities as well as food services ticketing.
GENEVA, SWITZERLAND – Apple is making headlines this week for bypassing Exxon, if briefly, as the largest publicly listed US company, in the chaos of stock markets this week. In May 2010 it bypassed Microsoft as the largest tech company.
Big doesn’t necessarily mean everyone loves it, however, and in particular Apple is facing fights with the Financial Times, Wal-mart and Amazon, among others who are refusing to put their new iPad apps through the Apple iTunes system because of Apple’s insistence on taking a 30 percent bite.
The Atlantic calls it the beginning of the end of the Apple App Store, noting that “Amazon and Walmart have challenged Apple to a duel with the release of the Kindle Cloud Reader and Walmart’s Vudu streaming site.”
Links to other sites: the Globe & Mail, Reuters
ZURICH, SWITZERLAND – The Swiss National Bank said Wednesday morning 10 August it was taking new measures against the strength of the Swiss franc, following its intervention last week, which failed to stop the flow into the currency as a haven.It is not ruling out further action.
“The SNB aims to rapidly expand banks’ sight deposits at the SNB from currently CHF80 billion to CHF120 billion,” it says, to “accelerate the increase in Swiss franc liquidity” and the central bank will begin foreign exchange swap transactions, a monetary policy it last used autumn 2008.
The SNB cited, in a statement, the “massive overvaluation of the Swiss franc” which is says “poses a threat to the development of the economy in Switzerland and has further increased the downside risks to price stability.”
Nestle in Vevey says still competitive in spite of a strong Swiss franc
VEVEY, SWITZERLAND – Swiss-based, food and drink giant Nestlé SA says it has performed well in spite of a strong Swiss franc.
“Nestlé continued to make good progress in a period characterised by political and economic instability, natural disasters, rising raw material prices and, yes, a strong Swiss franc.”
Sales reached CHF40.9 billion, down from CHF47.1 billion the previous year, again reflecting the strength of the franc.
The announcement came during its mid-year Revenue and Operating Profit report.
Bloomberg news says today’s results “beat analyst expectations,” which sent Nestle shares up 1.3% to CHF47.31 on the Zurich exchange.
The maker of Nescafe, Jenny Craig and Haagen-Dazs said sales during the first six months grew 7.5% in constant currencies, excluding the impact of its sale of eye-care company Alcon.
The world’s biggest food company, says it foresees a difficult second half of the year.
“We expect continued challenging conditions including political and economic instability, volatile raw material prices and subdued consumer confidence in the developed world.”
The Swiss franc is at an all-time high affecting Swiss-based companies.
The Swiss Federal Council says it is closely watching the situation, studying options and is ready to act if necessary, but it cautions against knee-jerk reactions that provide only short-term solutions. Last week the franc rose despite the Swiss National Bank chairman attempting to talk down the “absurd overvaluation” of the Swiss franc.
Swiss left out of G20 meeting
ZURICH, SWITZERLAND – Switzerland and Germany’s foreign ministers Sunday confirmed media reports that an agreement will shortly be announced on a tax deal. The Swiss Foreign Affairs Department said in a statement that Swiss President and Foreign Minister Micheline Calmy-Rey and German Foreign Minister Guido Westerwelle “both praised the progress that has been achieved in the area of taxation, as well as the generally intensive relations between Switzerland and Germany.”
The two met Saturday 7 August in Locarno, on the sidelines of the Locarno international film festival.
Calmy-Rey “stated that she was pleased that the negotiations concerning an agreement on withholding tax will shortly be brought to a conclusion, and she went on to underscore the fact that ‘Switzerland’s banking sector has no interest in untaxed assets.’ She noted that withholding tax is a fair way of taxing German assets without an automatic exchange of information, and it also guarantees the confidential management of client data,” according to the statement.
Switzerland has not yet confirmed details of the deal, but financial media have been reporting a 26 percent withholding tax as likely, in future.
Swiss newspaper SonntagsZeitung reported at the start of the weekend that a deal is expected to be announced Wednesday 10 August, with Swiss banks agreeing to pay an upfront lump sum for Swiss accounts held by Germans who did not pay taxes in the past 10 years. The amount agreed to, possibly CHF2 billion, is reported, by what the newspaper calls a source close to the deal, to be a fraction of what Germany initially demanded.
G20 meeting in Cannes won’t include Switzerland
Switzerland’s disagreements with its neighbours over accounts held by their citizens in Swiss banks was dealt a new blow over the weekend, however, when the Seco, Switzerland’s economy ministry, confirmed to news agency ATS that French President Nicolas Sarkozy has invited Singapore, but not Switzerland, to participate in the next G20 meeting. Switzerland has been busy for several months building its influence to counteract the possibility it would not be invited to the G20 talks.
Switzerland, despite its role as the world’s top fortune management centre, is not a member of the Group of 20, the world’s largest economies, created in 1999 “to bring together systemically important industrialized and developing economies to discuss key issues in the global economy.” The high Swiss franc is currently viewed by a growing number of investors as one of a small group of “shadow currencies”, reports the Economist and other international media.
It was not invited to the last meeting of the group, in Seoul, but Sarkozy has told Switzerland it will be “integrated” into the G20 meeting, even if it is not directly participating. Switzerland fears a repeat of one of the Seoul meeting outcomes. TSR/ats reports that “the objective of this offensive is to prevent a repeat of what happened in 2009, when Switzerland, without any advance consulation, was put on a gray list of tax havens by the OECD, at the instigation of the G20.”
The next meeting will be held in Cannes in November 2011, under France’s presidency.
India studies stolen HSBC-Geneva account holders data
Meanwhile, India Express 7 August published a story saying that France has handed over to Indian authorities the names of 700 holders of HSBC bank accounts in Switzerland. France received stolen data from a former employee of the UK bank’s Geneva branch, in 2008 and the theft increased tensions between France and Switzerland over the issue of tax evasion and the use of stolen data.
The Indian Foreign Ministry says it already had most of the data from other sources, but will be checking the accounts.
Football and skiing cause greatest number of sports injuries, Swiss safety statistics show
Source: BPU 2011 (click on image to view larger)
ZURICH, SWITZERLAND – The greatest number of injuries to children around the home in Switzerland are due to falling from heights, while by age 26 falling on stairs becomes more of a problem.
By age 45 we become wiser about avoiding falls in general, until age 65 when we suddenly fall more often at level ground and once again from heights. But we remain far more careful about stairs in our old age.
The details of how and when we are likely to injure ourselves in accidents are part of the lastest Swiss safety statistics, published Wednesday 3 August by BPU, the Swiss Safety Council.
Accidents cost the country CHF55 million in 2008
The new figures, culled from 2008 statistics, underscore the often-ignored fact that accidents are a major and costly public health problem. Accidents caused more than 61,000 deaths in 2008, the most recent year for statistics and the one covered by the report.
Disease, by comparison, caused some 57,000 deaths.
The figures hold true for every age group: accidents at all ages take more lives than disease.
The total economic burden of all accidents in 2008 was CHF54.8 million, with home and leisure accidents accounting for more than half, CHF30 million. Road accidents cost more than the sports or home/leisure accidents when tangible costs alone are considered, but the longer-term cost of home and leisure accidents is more than double the figure for either road or sports accidents.
The statistics also show that for the three categories of road, sports and home/leisure accidents, the greatest number of people who are disabled or severely injured have had accidents at home, some 29,000. The figures for people disabled or severely injured by road accidents and sports are about the same: some 12,000 people in 2008 for each group.
The highest number of deaths, 1,538, was due to home accidents, followed by road accidents, 329, and sports accidents, 129.
Road accidents, however, carry the greatest risk of disability, severe injury or death, based on the rates in 2008. BPU registered 91,000 road accidents, 310,000 sports accidents and 600,000 home and leisure accidents.
